Electricity pricing trends challenge conventional wisdom on retail wheeling

Journal Article · Mon Apr 01 04:00:00 EST 1996 · Electricity Journal

DOI:https://doi.org/10.1016/S1040-6190(96)80413-1· OSTI ID:457697

Smith, K J

Contrary to prevailing belief, US industrial electricity rates are not rising. Indeed, they are well below the average for industrialized countries, and US rates are actually falling. Retail wheeling is thus a solution to a problem that doesn`t exist. The current debate over the restructuring of the electric utility industry is driven predominantly by large users` concerns over the allegedly high price of electricity. Large users claim that industrial rates are increasing and, moreover, that this increase has subsidized relatively low commercial and residential rates. To reduce their per-kilowatt-hour electricity cost, large industrial customers have urged public utility commissions throughout the US to provide retail users with greater flexibility to negotiate commodity electricity prices. The proposed vehicle for achieving this leverage is {open_quotes}retail wheeling,{close_quotes} also known as {open_quotes}direct access.{close_quotes} Their hope is that greater customer choice through increased transmission and distribution access will result in lower rates. In response to recurrent claims that electricity prices are increasing, the Natural Resources Defense Council recently completed a study on rates for the industrial, commercial and residential sectors. This study provides a 20-year historical perspective of electricity prices. It shows that, contrary to popular belief, national electricity prices have in fact gone down since 1982 in real dollars. The study also shows that while industrial rates in the US and California have decreased significantly over the last ten years, residential and commercial rates have declined more slowly, or, as is the case in California, have actually increased. These findings demonstrate that there is no obvious trend that would suggest industrial customers are subsidizing rates for commercial and residential customers.

• OSTI ID: 457697
• Journal Information: Electricity Journal, Journal Name: Electricity Journal Journal Issue: 3 Vol. 9; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
COMPETITION
COST
ELECTRIC POWER
ELECTRIC POWER INDUSTRY
HISTORICAL ASPECTS